They Are All For Competition … Until

The conservatives in this country are all for market-based solutions and competition under a capitalistic regime … until … until it hurts their bottom line.

The “party line” is that competition is good because better businesses succeed and poorer business fail, thus improving the overall quality of business. (I wonder if Trump’s evangelical Christian base understands how Darwinian capitalism is? Hmm.) But when it comes to businesses some of the elite have stock in or receive “campaign contributions” from (Wink, wink, nudge, nudge, know what I mean?), then it is all hands on deck to preserve the privileges of that business, or the business itself.

The coal industry has been in decline for a very long time. In the early 1900’s almost a million people had jobs mining coal. By the early 2000’s that was down to around 75,000 and recently some say down to closer to 55,000. In those early days the reductions in the numbers of jobs was due to mechanization. Coal didn’t need as many men wielding picks and shovels when they got steam power, then electrical power to their mines. More recently, the demand for coal has dropped. Its primary use has always been as a fuel to create motive power, e.g. steam railroad engines, or stationary power, e.g. electrical generation. Recently, the POTUS unveiled a plan to lower the regulations of coal mining to unleash the sleeping giant. At the same time, a Southwestern energy company decided to do through with their plans to mothball three coal-fired electricity generating plants. The reason? There was a bit of a glut in capacity, electricity being cheaper to produce in plants using natural gas as a fuel. Coal is being displaced by … wait for it … wait for it … another fossil fuel. (Oh the irony! Har de har har …)

Even if it could withstand the challenge of cheaper natural gas, renewables like solar and wind are waiting in the wings to deliver a knock out blow. The only coal being mined in the future will be to make chemical feedstocks (chemicals used to make other chemicals). Burning it to make energy (and CO₂ that is causing Climate Change) will no longer be part of the picture. In addition as “smart grids” become implement to distribute electricity, the huge amount of electricity being lost/wasted will become available for use, and …

Dude, the coal party is over. But archbusinessman and President of the United States, Donald Trump, still things coal is being killed by excess governmental regulation. Donald Trump is also dumb as a post. This is capitalism baby, you are supposed to be fer it, not agin’ it. (Somebody please tell Trump.)

And, I cannot stop by this topic without noting that some of the store-bought politicians are claiming that solar power and wind power are only succeeding because of government tax breaks and purchaser tax credits … and they say this with a straight face! These are the same elites that made sure that the coal and oil industries got healthy protections from foreign competition and … wait for it … direct government subsidies. The oil subsidy (the tap is still open) is a century old and costs tax payers $8 billion dollars per year. Will someone tell those pols that the idea was to protect the industry in its infancy, not through to the old age home.

I wonder if the coal industry will continue to get their subsidies after they close their businesses. After all, the bribes they pay the politicians for continuing to vote them in have to come from somewhere.

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GOP Plans to Repeal Dodd-Frank Legislation

Why do we need legislation that prevents big banks from undermining the whole world’s economy with overly risky investments? We can trust them. They are our friends.

Granted the Dodd-Frank legislation didn’t go nearly far enough (millions of dollars per day were spent lobbying against the law in the first place and then against its implementation after it was passed). The Glass-Steagall law should have been re-enacted verbatim, plus a whole lot more, but “burdensome regulation” is undermining progress in this country (whine, whine, sniff). This is why the big banks circumvented the existing regulations, corrupted regulators, and invented unregulated shadow banking in the first place.

We will only be free when big banks can wreak havoc as much as they desire … and, of course, our government bails them out every 6-8 years when it all crashes into ruin. Heck, the last time only cost us $2,000,000,000,000 (yes, that is two trillion dollars) plus several trillion more in lost property values, but that only affected ordinary citizens (they got no bailout, don’t you know).

At this point, I am starting to root for the GOP’s bad ideas. The party has so desperately wanted to do all of these things for years! And they are going to own the repercussions of each and every one of them.

Deregulation and Trust

As I have commented on before, an article in JAMA Internal Medicine reported that in the 1960s, the sugar industry paid Harvard scientists to publish a study blaming fat and cholesterol for coronary heart disease while largely exculpating sugar. This study, published in the prestigious New England Journal of Medicine in 1967, helped set the agenda for decades of public health policy designed to steer Americans into low-fat foods, which increased carbohydrate consumption and exacerbated our obesity epidemic.

And, as I have done often enough, I will take a step back and look at this in context.

Part of the Republican agenda is that excessive government regulation is strangling American business and if those regulations were done away with, the power of American ingenuity would be unleashed.

Well, once again we see in the behavior of the sugar industry what they would do if government regulations were dispensed with. We have seen this from Big Oil, Big Pharma, Big Agriculture, the tobacco industry (they are alive and well selling to unregulated foreign markets), the banking industry, the financial sector, etc. They are adept at manipulating the regulations in the first place (Is Dodd-Franck done yet?) and once those are in place they are adept at manipulating the regulators.

Can you imagine what their behavior would be like in the absence of regulations? I think it is safe to say we can “trust” them to be who they are.

One has to wonder that Republicans are even willing to share their deregulation goal with voters; it seems to confirm their depravity.

Why the Inequality?

Well, bubbie, it wasn’t by accident!

From How ‘Competitiveness’ Became One of the Great Unquestioned Virtues of Contemporary Culture by William Davies, a Senior Lecturer at Goldsmiths, University of London (Posted on July 30, 2016 by Yves Smith)

“I suggest that we need to understand how competition, competitiveness and, ultimately, inequality are rendered justifiable and acceptable – otherwise their sustained presence in public and private life appears simply inexplicable.

“And yet, this approach also helps us to understand what exactly has broken down over recent years, which I would argue is the following: At a key moment in the history of neoliberal thought, its advocates shifted from defending markets as competitive arenas amongst many, to viewing society-as-a-whole as one big competitive arena. Under the latter model, there is no distinction between arenas of politics, economics and society. To convert money into political power, or into legal muscle, or into media influence, or into educational advantage, is justifiable, within this more brutal, capitalist model of neoliberalism. The problem that we now know as the ‘1%’ is, as has been argued of America recently, a problem of oligarchy.

“Underlying it is the problem that there are no longer any external, separate or higher principles to appeal to, through which oligarchs might be challenged. Legitimate powers need other powers through which their legitimacy can be tested; this is the basic principle on which the separation of executive, legislature and judiciary is based. The same thing holds true with respect to economic power, but this is what has been lost.

“Regulators, accountants, tax collectors, lawyers, public institutions, have been drawn into the economic contest, and become available to buy. To use the sort of sporting metaphor much-loved by business leaders; it’s as if the top football team has bought not only the best coaches, physios and facilities, but also bought the referee and the journalists as well. The bodies responsible for judging economic competition have lost all authority, which leaves the dream of ‘meritocracy’ or a ‘level playing field’ (crucial ideals within the neoliberal imaginary) in tatters. Politically speaking, this is as much a failure of legitimation as it is a problem of spiralling material inequality.

“The result is a condition that I term ‘contingent neoliberalism’, contingent in the sense that it no longer operates with any spirit of fairness or inclusiveness. The priority is simply to prop it up at all costs. If people are irrational, then nudge them. If banks don’t lend money, then inflate their balance sheets through artificial means. If a currency is no longer taken seriously, political leaders must repeatedly guarantee it as a sovereign priority. If people protest, buy a water canon. This is a system whose own conditions are constantly falling apart, and which governments must do constant repair work on.”

Why Are Bankers Rich?

The title should probably be “why do we expect banker’s to be rich?” but brevity is something I am working on.

When I was a youngin’ my communities bankers were, well, prominent people. Financially, they were well-to-do, we would say. Were they rich? No, nobody thought that. You see, community bankers are technicians: they work the levers of systems designed by other people. They were paid well, because they had the opportunity to steal a great deal of money, so getting a really well paying job was a disincentive to robbing the bank through embezzlement. Then the banks figured out how to include computerized checks and barriers to prevent such things, they ceased to have marble edifices and brass accoutrements and older people in charge (I do not recall seeing a young banker as a youth, they were all old men, conveying a sense of stability and gravitas.) and then banks and savings and loan institutions all of a sudden had much younger people in charge, of course on much smaller salaries. But then we got our “banks” putting up Halloween decorations and the like, much more festive.

So, today community bankers aren’t expected to be rich … they are just technicians.

But investment bankers, now they were expected to be rich. When I was young, an investment banker invested funds from a pool they collected and to make sure they didn’t embezzle money, they had to make a sizeable contribution to the investment pool. They were gambling their own money as well as their partners and interested investors. This was a rich person’s game. And if an investment banker wasn’t rich or getting rich they were a walking billboard screaming “Failure!” because the lucrative investments they were supposed to be making were not all that good, apparently.

There were just a few investment bankers, ever since the great Depression made sure that the funds in community banks were not to be mingled with the funds in investment banks (hint: the Glass-Steagall Act of 1933). Well, a gift from Bill Clinton and the other neoconservatives in the Democratic Party (we starting to agree with the arch conservatives who call the party the Democrat Party, because it doesn’t seem very democratic) was the repeal of Glass-Steagall because, well, according to the then economic geniuses, we were all grown up and didn’t need the training wheels anymore. (Why is it that economists have a track record that makes weathermen look as accurate as sharpshooters and we pay any attention to them at all?)

Just about a decade after the repeal of Glass-Steagall, we got the Great Recession, courtesy of that repeal. And the perpetrators of the Two Trillion Dollar Debacle got away scot free (shush, politically correct people, the term has nothing to do with Scots or Scotland; look it up)! Not a one went to jail. In the savings and loan crisis in the 1980s, 3,000+ bankers were prosecuted and 10% went to jail. This time, not a one because, you see, bankers are supposed to be rich.

Rich bankers make political contributions and we can’t afford to offend them, because, well, they are rich.

Like the Black man in Dallas who decided it was time to even the score with the police (deplorable, yet understandable), I wonder when it is that people are going to decide there are too many rich bankers and it is time to cull the herd.

The U.S. is Replacing Free Speech with “Free Speech”

The whole concept of free speech has undergone a tremendous amount of change since the drafting of the U.S. Constitution. To the Framers of the Constitution, including Benjamin Franklin who was a printer, remember, the idea of free speech was to protect political speech … by politicians. England had a long history of members of Parliament being harassed or killed by the monarch of the time based upon what they said in the halls of government. This was addressed in due time by the concept of free speech … applied only to politicians. The concept of free speech was designed to protect politicians from such abuse and wasn’t considered applicable to ordinary folks, especially not to newspapers. (The newspapers of revolutionary times would be referred to now as “tabloids” or “scandal sheets,” since they were.)

England still has a set of libel laws that would make us blanch, over the pond. If convicted of libel, you can find out the actual cost of your words. Our libel laws are not so draconian, but we have expanded the right of free speech to include ordinary speakers. This, I think is a qualified “good thing.”

Currently, our news media have become corporate and governmental mouthpieces. The Fox Network, exists only to support a political ideology and has no commitment to the truth in anything. Most of the rest of the news organs in this country have been taken over by corporations seeking profits. Gone are the days in which TV Networks supported independent news rooms, with no need of a profit being made, because the networks had “Jack Benny to make money.” Now, a news show that doesn’t make money is scrapped in short order. So, the goal of such programs is #1 to make money. All of the idealistic-sounding goals like: support the republic, contribute to society, etc. are way down the list. (This all began in earnest, by the way, when Ronald Reagan shitcanned the “Fairness Doctrine.”)

So, now an aphorism I was taught comes into play. That is “in the absence of good communication, people will make things up and it is always negative.”

Enter the Blogosphere and its minions, the Twitterverse, and whatever the fuck Facebook is … Narcissismland?). Yes, I am aware that this blog is part of the chatter. The problem is: if one looks at the chatter, how much of it is worthless to the support of our society and culture? If you aren’t convinced that only a tiny fraction of the blah, blah, blah is serious commentary, go onto YouTube and do a search for “Cat Videos.” Without cat videos YouTube would be less than half its current size.

Free speech in this country has become mindless chatter. Our politicians never say anything of substance (if they do it is labeled a “gaffe”). So, the role free speech plays in maintaining our country has dropped to almost zero.

There are two ways you can control information: provide nothing but silence, a la Soviet Russia, or you can, as the saying goes, “if you can’t dazzle them with your brilliance, baffle them with bullshit.” Since we are already up to our hips in 24-hour news cycle bullshit, I thought by now the smell would have given away its presence, but apparently not.

Drowning in Economic Bullstuff

“I got out and they sucked me right back in.”
SPR

In an editorial in the NY Times (Don’t Break Up the Banks. They’re Not the Problem.) Steve Eisman, one of the real folks portrayed in the movie “The Big Short,” argues that we should not want to break up the big banks, because well, it is messy, and it would hurt economic growth, and well, just because.

“If we want a stronger economy, improving the distribution and growth of personal income should be our focus. Breaking up the big banks will not help, and might even hurt.”

These people are incredible.

The whole point in making the banks as big as the are, including the repeal of the Glass-Steagall act, was to continue the shift of the stock and other markets away from their original intent and toward speculative investments, none of which benefits the country or ordinary citizens. The stock market has become the tool of speculators and little else.

When you were in school, I am sure, you were taught the party line about the stock market, that a company, could sell itself by issuing stock certificates to a large number of people (thereafter the company is “owned” by whoever owns 51% of the stock). The money generated by this sale of stock allows the company to invest in its own growth as a “public corporation.” The company then paid “interest” to those who bought the stock (dividends) and maybe, down the road, the stock could be sold for a profit. It is a nice fairy tale and it is true as far as it goes. But all you need do is examine the most recent “star” initial public offerings (IPOs) to see something strange. Take Facebook’s IPO, for example. Facebook doesn’t make anything and I doubt anybody in your circle of acquaintances could explain how it makes money, but its stock price soared like an eagle then went down and back up. People were literally panting to buy stock in this company, a tech company that probably will not be around in 10 years , certainly not in 20 years. The example we were given in school was local widget factories, factories that employed our parents.

As far as breaking up the big banks “hurting the economy” because it would “disrupt all of the loans they were making,” consider the bank bailouts of 2008 and 2009. The federal government made the mistake of not tying the bailouts to the “loans” they could be making, so what did the banks do? They looked around and said, “there is no growth” so there is no reason to loan and they bought stocks and bonds with the money. Figure it out! If someone lends you money at 0% interest and you can invest it in the stock market at 5-6% or even higher. Talk about free money. All of that investment in the stock market made stock prices soar (the “markets” recovered from the Great Depression first, remember?) which made those banks investments even more valuable, made them even more money … that they still did not make loans with. The whole idea of them making loans with “free money” was to stimulate the economy by companies taking a chance to expand while it was cheap. People would be hired, goods bought, by these expanding companies and soon the recovery would be well under way. “Oh, wait, look! A shiny new stock certificate, I think I’ll buy that instead of making a loan with the money,” was the bank’s response.

The reason to break up the banks is because they are scum-sucking pigs, that when given the opportunity to make loans for free to help the economy recover from the largest economic depression in almost a century, they decided to profit from our loss. Then they spent hundreds of millions of dollars lobbying against any change in the rules that allowed them to speculate unhindered by effective regulation/regulators which created the GD in the first place.

Gee, it is complicated! Gosh, oh, what can we do? All we need do for now is separate federally insured bank accounts from speculative ones and let them figure it out. They are, after all, the “new” smartest guys in the room.

Cognitive Dissonance? Nope. Nothing to See Here, Move Along

The GOP insists upon a number of principles that are completely contradictory to reality for anyone to be a true believer. A the top, you must believe in the supremacy of free markets, that all government regulation of such is bad. This, of course, flies in the face of a steady stream of corporate bad/illegal/destructive/careless behavior. Think about Enron, the subprime mortgage disaster, the price of gasoline going up while demand was going down due to speculators, Monsanto, the Koch brothers trying to eliminate government support for alternative energy in Kansas, the Wall Street banks gambling with other people’s money and cheating their own customers, the fracking companies (What earthquakes? Water doesn’t burn. We don’t contaminate your water, no. All we want are laws that send people to prison for describing what we are doing.), railroad tank car fleet operators (What explosions? Our cars are perfectly safe.), General Motors (That’s not a defective ignition switch, you must have bumped the keys with your knee. Problems, there are no problems.), . . . , I forgot about the nuclear fuel company that buried its waste “out back” instead of processing it according to the law. (Okay I am done, wait, …)

So, if the free market would correct all of these things, why did they happen in the first place? Did government regulations cause all of these things? Was it too expensive to do things the right way, so they took forced shortcuts, knowing their parent corporation could “disincorporate” if things got really bad?

“The free market ideology is actually just an economic manifestation of human greed.”

Free markets are driven by greed, no matter their original attentions. Manipulation of “free” markets is the quickest path to wealth and so attracts greedy people. (Free markets are by nature based upon all parties having perfect information, free from anything manipulative, like advertising.) What aspect of free markets protects us from those greedy people? There is nothing.

Government taxes upon corporations are a way of charging those corporations for their externality costs (their use of the roads, communication networks, etc., their pollution of the air and water and land, and other things we share) but those same corporations have bribed government officials to eliminate or reduce their corporate taxes to a bare minimum, leaving their externalities to be paid for by others (us). They also make sure all of the laws benefit them and not the general citizenry. As just one example, college students cannot expunge college loan debts (to corporations) through bankruptcy, but corporations can avoid a massive toxic waste cleanup that way.

So, what is it about free markets that will “correct” for these corporate failings and manifestations of greed?

The answer is short—nothing. The free market ideology is actually just an economic manifestation of human greed. “Leave us alone to make as much money as we can and maybe you will benefit sometime down the road. Don’t interfere. Ignore that man behind the curtain.”

Is it just a coincidence that anytime we get close to their ideology that the rich getting richer and the poor getting poorer accelerate? I don’t think so.

Since these zealots claim that anything that smacks of regulation of free markets is socialism, well, then I am in favor of socialism, at least in so far as it is practiced in Scandinavia. There the reins on human greed, er, free markets, are held tightly by public interests.

It Ain’t Envy and It Ain’t Jealousy Plutocrats

Recently a number of the 0.1 Percent have come out of the woodwork to complain about how they are being treated by the press and bloggers like, well, me for one. Of course, they came out ham-handed, referring to how they are being treated with Nazi references and slavery references.

Really? Just stop.

Their core complaint, if I can discern it, is that when jealousy and envy are stirred up against a minority it off doesn’t end well.

Really? Just stop.

These plutocrats say that we are jealous of their wealth and power, that we envy them. Interesting because I don’t recall ever having met any of those people and I am someone who really, really likes hanging out with rich people. I like it when somebody picks up the check for dinner and says “Think nothing of it” and means it. I am neither envious nor jealous of their wealth.

Instead they say they are rich because they studied harder in school. That they are smarter. That they work harder.

Really? Just stop.

Are you smarter than a theoretical physicist? I doubt it. Smarter than a brain surgeon? I think not. Did you really study harder in school? I think not. I studied chemistry. At no time did I take the minimum number of units required in a semester or fewer in my first four years (and played basketball all four years). Did you study harder than two of me? If so, you are superhuman and you would deserve two or even three times what I made as a chemistry professor. (I made about $2 million in my forty years of work.). And, you say you work harder. Harder than three bus drivers pulling eight hour shifts? If so, you’d have to work over 24 hours per day. And then you’d deserve to earn over three times what a bus driver makes. But you don’t do you?

In 2011, for example, eleven hedge fund managers made over one billion dollars that year which put them into the top 0.1 Percent, no? That, in case you aren’t a regular reader of this blog and would know this already, is over $500,000 per hour of income (based on a 40 hour work week, normal holidays and two weeks of vacation per year).

What we are criticizing you for is not your wealth but for your extremely bad behavior. Realize that to blow through a billion dollars, you would have to spend over $500,000 per hour to get it done in a calendar year. That amount of money would do for anybody for their entire lifetime but it was not enough for you, now was it.

It wasn’t enough that you played games with other people’s money, you took your gains (of which we were neither envious nor jealous) and parlayed them into even greater wealth . . . by gaming the system. You bribed public officials to change the rules (aka tax laws, investment laws, etc.) to favor you over others. You encouraged others through your securities purchases and manipulations to screw their employees by shipping their jobs overseas and by suppressing their wages while you saw to it that your bribed politicians made it harder and harder for labor unions to defend the interests of workers. You financed Republican and Democrat campaigns to make sure all were beholden to your interests.

You have gutted the middle class, your best customers by the way, and undermined American Democracy just so you could make a second (or third, or sixty-eighth) billion dollars. And for what? Just to prove you are a bigger asshole than the other billionaires?

We aren’t jealous or envious of your wealth. Most of us would look at your money and say “if to get this I have to be as big an asshole as you are . . . it’s just not worth it.”

So, really, just stop. If, like your predecessors, you took your money and ran, no one would be saying boo to you. It is because you just have to screw with the rest of us that you are hated.

Climate Confusion: There is No Debate!

In an opinion piece in today’s New York Times (If You See Something, Say Something), Michael E. Mann, the director of the Earth System Science Center at Pennsylvania State University and the author of “The Hockey Stick and the Climate Wars: Dispatches from the Front Lines stated: “The overwhelming consensus among climate scientists is that human-caused climate change is happening. Yet a fringe minority of our populace clings to an irrational rejection of well-established science. This virulent strain of anti-science infects the halls of Congress, the pages of leading newspapers and what we see on TV, leading to the appearance of a debate where none should exist.”

So far so good, but he then goes on to state:
“Until the public fully understands the danger of our present trajectory, those debates are likely to continue to founder.” (He goes on to encourage scientists to engage in the “debate.”)

Arrrrghhh! There is no debate. The public understands.

“This is the only problem—it is called corruption.”

The core of the problem is that Washington politicians and many state politicians have been paid large sums of money to take positions in opposition to the reality of climate change. And you don’t have to discuss the merits of solutions if you don’t recognize there is a problem—stalemate! The Fox (sic) News Channel reinforces those ideas because it has received large amounts of money for doing so. No reputable news organization opposes the science of climate change.

This is the only problem—it is called corruption, political corruption. It’s base is that we allow corporations that are regulated by government to give money to those politicians regulating them, even when they are not running for office. From then on it is the Golden Rule (Them’s that has the gold makes the rules!)